WET News

leaders 2016 7 the beginning of the AMP cycle. We want to make sure the group hangs on to those resources but clearly they need to be fully utilised so they'll be in a different sector," he says The last year with the changeover from AMP5 to AMP6 was "quite steady", says McGilvray. But it was not all plain sailing, although "the swings matched the roundabouts to put it simply. There were slow starts in some areas and fast starts in others." Jigsaw An added bonus for McGilvray involved some well performing AMP5 contracts where gains share arrangements benefited Balfour Beatty. "That gives you a nice little boost at the end [of the AMP cycle], so to speak." McGilvray says there is "certainly no disappointment" in the water business, which achieved at the beginning of the year what it was expected to do. "But we wouldn't necessarily have predicted the individual parts of that jigsaw. Overall though, because we've got a wide portfolio of water clients we're happy with the outcome." He says the water business has been moving progressively away from the shorter cycles of work and to play what he considers to be the appropriate role at the top tier of the industry – getting heavily involved in most of the larger programmes. He is happy with the client relationships that the business has, although Severn Trent Water is missing from the list. This is something that he hopes will be rectified in due course, and there are discussions already with the water company. "We're certainly covering the clients that we would like to work for given we need to work at scale. Inevitably with some of the smaller water companies there isn't enough activity for us to get our expected returns out of. We've got plenty of business to keep us busy for the next two or three years. We will not rush into anything for new customers, we'll take everything on a measured basis." McGilvray says the focus of the water business is to align itself to client strategies, spending more time understanding what they are grappling with and then trying to bring more of Balfour Beatty to bear on those challenges. "Within water there are opportunities to widen what we can bring but it really comes down to engaging into the client's mindset and investing the time to deepen our understanding of their world. Be more proactive and less reactive, and that's a real focus of the way we're trying to change the way we think is the business. McGilvray concludes: "Our focus is to understand the direction our clients are going in and we will hopefully learn to do more for them and take on appropriate risk. They might say a contractor can do this for us and I'd like to see us more engaged in asset management and operations. But it will be led by the client." THE NUMBERS 2012 2013 2014 % cHaNgE Sales £M 8,656.0 7,488.0 7,264.0 -3 Gross profit £M 989.0 435.0 131.0 -70 Operating profit £M 154.0 -33.0 -281.0 n/a Pre-tax profit £M 121.0 -49.0 -304.0 n/a Staff 50,174 49,785 39,751 -20 Net assets £M 1,310.0 1,033.0 1,227.0 19 THE RaTIOS 2012 2013 2014 % cHaNgE Return on capital % 9.2 -4.7 -24.8 422 Gross margin % 11.4 5.8 1.8 -69 Operating margin % 1.8 -0.4 -3.9 n/a Net margin % 1.4 -0.7 -4.2 n/a Sales/employee £K 172.5 150.4 182.7 21 Balfouy Beatty's water business has been moving away from shorter cycles of work The LeADeRS 2016

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